As the economic and financial environment toughens, electricity supply promises to be an important driver of regional competitive advantage as business and individuals search for locations where services are reliable.
South Africa’s electricity supply and cost issues have become increasingly important for the country’s property market in recent times, notes John Loos, property sector strategist at FNB Commercial Property Finance.
In 2021, this percentage was not significantly different from 2012, measuring 12.4%, noted the financial services firm. Eskom has applied to the National Energy Regulator to increase tariffs by 38.1% for 2023/24. “In addition, the timing of big electricity tariff increases gets progressively worse as the economy stagnates, and the economic stagnation is in part due to a deteriorating power supply. General inflation has surged recently, and interest rates are on the rise too,” he said.
“The current financial time is thus a significantly tougher environment in which to absorb electricity tariff increases, or cost increases associated with finding alternative reliable power supply sources, compared with more than a decade ago,” said Loos.The indirect impact of the electricity crisis on property markets is difficult to quantify but easy to understand, noted Loos.
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